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Thinking Inside The Box: E-Commerce Gives Rise To Taller Warehouses

New Focus On Three-Dimensional Space CBRE Data Shows 13.7B Cubic Feet of Warehouses Built in U.S. Since 2010, led by California’s Inland Empire

The rapid growth of e-commerce fulfillment networks in recent years has resulted in a steady increase in the height and volume of warehouses and distribution centers, likely necessitating a shift to three-dimensional measurement of industrial space, according to a new research report from CBRE Group, Inc.

The average height of warehouses built in the U.S. has steadily risen from roughly 24 feet in the 1960s to 32.4 feet this decade (33 feet in 2016). E-commerce companies have made use of that additional vertical space by installing mezzanine levels, allowing them to add more human inventory pickers in each building.

Such mezzanine levels aren’t typically included in measures of a property’s or market’s industrial square footage. Thus, measuring cubic footage might be the better way to examine the full extent of warehouse and distribution-center space.

“This trend will continue as developers need to provide a hedge against new technologies that users are implementing to be more efficient -- typically relating to cubic useable space,” said Kurt Strasmann, CBRE’s Southern California industrial & logistics market leader. “In some cases we are seeing new developments on large box space with up to 40-foot clear heights. Think back 10 years ago and how fast technology and ecommerce has affected the construction and design of new industrial product.”

He added “Remember we are only in the beginning stages of the e-commerce boom. The design will continue to change to accommodate companies’ needs, or else the building will be obsolete and devalued. Right now, clear height is one of the most important criteria for their use.”

CBRE data shows that 13.7 billion cubic feet of warehouse space was built in the U.S. from 2010 to 2016, with 65 percent of that total coming in the 10 largest markets, led by California’s Inland Empire, Dallas/Fort Worth and Chicago.

In contrast, measuring those newly built warehouses by ground-level floor area yields only 422.5 million square feet.

“There’s an argument to be made that industrial space should be talked about on a volume basis, not an area basis, because that space above the floor is very important,” said David Egan, CBRE Head of Industrial & Logistics Research in the Americas. “It’s key for labor-intensive users like e-commerce companies, which can put more racks and employees in that additional workable space.”